Canal Plus denies sale of Expand stake to RTL

An unsubstantiated report in French newspaper Le Figaro suggesting that Canal Plus is about to sell a stake in Expand, a leading French television production outfit, to Luxembourg's RTL Group has prompted vehement denials.

Born of the merger between Ellipse Programmes and the Expand group, Expand is a European leader in gameshow and animation programming and is currently 33% owned by Studio Canal, the film production and distribution offshoot of Canal Plus.

This latest speculation about Expand's future ownership, which first surfaced in print on March 16, could not have come at a worst time for Canal Plus. The company is currently negotiating to buy a further 22% stake in Expand that would be worth anywhere between Euros 435m and Euros 580m depending on final valuations - according to Le Figaro. Such a deal represents StudioCanal's new CEO Richard Lenormand's first major challenge.

In a statement, Canal Plus declared that a stake sale to RTL "would jeopardize the orientations and ambitions recently reported by StudioCanal". The pay-TV giant has also formally informed the Paris Stock Exchange watchdog, the COB, "in order to lift any ambiguities concerning the matter".

Complicating matters is that fact that StudioCanal's parent Vivendi Universal is in the process of merging its sports rights trading activities (Sport + and the Gerard Darmon group) with the RTL Group's UFA Sport. Such a move which makes sense in the wake of Canal Plus' loss of its share of Eurosport to TF1.

Although Canal Plus and RTL Group have repeatedly (but so far unsuccessfully) attempted to develop a partnership, it seems that any links between their film and television production activities is not on the immediate cards. That said, the two groups' core businesses and main territories are very complementary: Canal Plus is a European pay-tv giant and RTL Plus the leading free-TV operator in Europe. Moreover, RTL's strongholds are German-speaking territories and the UK, where Canal Plus is not present as a broadcaster.

However, there is a deep cultural divide separating the two corporate giants. StudioCanal (with a massive 5,500-title library) concentrates mostly on film (pay-TV's staple along with sport) whereas, for cost-conscious RTL Group, the film industry is a risky business which it has, for the most part, avoided.

But television production may be another matter. The Luxembourg-based company demonstrated the global scope of its ambitions when it merged with Pearson Group TV to form the largest integrated television production and free-TV broadcasting group in Europe.

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